Climate litigation now 'systemic risk'
- A WEF and Baker McKenzie study says climate litigation now poses “systemic risk” to businesses worldwide. - Courts are focusing less on whether companies acknowledge climate change and more on how climate is embedded into governance. - That raises emphasis on committee ownership, escalation paths, controls and board minutes showing active oversight. (businessgreen.com)
Climate lawsuits are no longer a niche problem for oil majors; a new World Economic Forum and Baker McKenzie report says they now pose a systemic risk to companies worldwide. (bakermckenzie.com) The report, published April 23, says courts and regulators are increasingly treating climate change as a legal risk that boards must anticipate, manage and disclose. It says the exposure now reaches corporate strategy, governance, capital allocation and market access. (bakermckenzie.com) The shift is in what judges are examining. Baker McKenzie and the forum said courts are spending less time on whether a company accepts climate science and more time on whether climate considerations are built into governance, strategy and decision-making. (bakermckenzie.com) In practice, that means plaintiffs and regulators can look for ordinary corporate records: which committee owns the issue, how warnings move up the chain, what controls back up public claims, and whether board minutes show active oversight. BusinessGreen’s account of the report says those internal processes are becoming central evidence. (businessgreen.com) The case load behind that warning has grown fast. A World Economic Forum analysis published in January said courts worldwide have heard more than 3,000 climate-related cases since the Paris Agreement era accelerated climate litigation. (weforum.org) The defendants are widening too. The Network for Greening the Financial System, a central-bank and supervisor group, said in a 2023 report that climate litigation is expanding in volume, legal theories and targets, with financial institutions now being sued directly in some cases. (ngfs.net) Researchers are also measuring market fallout. A 2024 Nature Sustainability paper examining 108 lawsuits against U.S. and European listed firms found average stock returns fell 0.41% after a climate-related filing or an unfavorable court decision, with larger drops for carbon-major defendants. (nature.com) The litigation pipeline is still filling. The Grantham Research Institute’s 2025 snapshot counted more than 2,900 climate cases filed globally through 2024, including 226 new cases in 2024 alone. (lse.ac.uk) Baker McKenzie’s report says five trends are driving the new risk map: liability claims reaching into value chains, scrutiny of whether transition plans shape investment decisions, rights-based and duty-of-care suits, more greenwashing cases, and litigation that pushes policy changes into regulation and investor expectations. (bakermckenzie.com) Alyssa Auberger, Baker McKenzie’s chief sustainability officer, said companies now need to treat climate claims and disclosures with the same rigor as material legal or financial risks. The warning in the new report is that climate oversight is becoming something courts can inspect line by line. (bakermckenzie.com)
